AZ LEGAL DOCUMENT PREPARATION -  Judith A. Block, AZCLDP
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Estate Documents

THE DIFFERENCE BETWEEN A WILL AND LIVING TRUST

Everyone has heard the terms "will" and "trust," but not everyone knows the differences between the two. Both are useful estate planning devices that serve different purposes and both can work together to create a complete estate plan.One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person, or an institution , bank or law firm, called a "trustee", holds legal title to property for another person, called a "beneficiary." A trust usually has two types of beneficiaries - one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies. A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred onto the trust. In order for property to be included in a trust, it must be put in the name of the trust.Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes a part of the public record, a trust can remain private.

Does a Will avoid Probate?

 
Not in all circumstances.  In Arizona, probate is necessary if a person dies with real property titled in his or her name that exceeds $75,000 in equity value, personal property that exceeds $50,000 in net value or unpaid wages of more than $5,000 after death.  The need for probate is not determined by whether or not the decedent had a Will.  It is determined by the type of property the decedent owned at the time of death and how that property was held.  Probate is not necessary for assets held as "joint tenants with rights of survivorship", paid on death, beneficiary deed, or assets governed by a contractual designation of beneficiary such as life insurance or 401(k) plan.  Small estates may be handled by means of a special affidavit.

What is a Revocable Living Trust?

A Revocable Living Trust is a type of trust that takes effect during your lifetime and can be changed or terminated at any time.  You retain control over the property in the trust by naming yourself as the Trustee and naming a successor Trustee to take over the trust administration at the time of your death.  It can be an important tool that allows you to continue to enjoy the use of your property during your life and avoid the necessity of a probate procedure for the distribution of your property after death.

What is a Will?

What is a Will?
 
A Will is a legal document in which you give instruction on how your assets will be distributed and how debts will be repaid following your death.  A Will helps you protect items of family or sentimental value from being sold in the court's estate administration process.  Without a Will, a deceased's property will be distributed according to the state intestacy statute, which vary by state, or may escheat (be forfeited to) the state.  This may take longer and cost more than if there is a Will.  Your estate might wind up being administrated by a total stranger appointed by the court.  In your Will, you name an individual known as a Personal Representative, in Arizona, to carry out your wishes.  Your chosen representative transfers your property to the people you have designated and pays off any debts under the supervision of the Probate Court.
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